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Garner staff recommends preserving two‑thirds bond capacity to protect future project funding
Summary
Garner financial staff briefed council on a statutory two‑thirds general obligation bond mechanism that could provide roughly $1.9 million of additional borrowing capacity this fiscal year and recommended preserving that capacity without increasing the total spring bond sale.
Garner Financial Director David Beck and bond adviser Ted Cole of Davenport & Associates briefed the Garner Town Council on the town’s opportunity to use a two‑thirds general obligation bond mechanism available under North Carolina law.
Beck explained that the town’s 2021 voter‑approved general obligation (GO) bond authorization allows up to $69 million in obligations and that the town previously issued the first tranche in 2023 and plans a second sale in spring. Cole described the statutory two‑thirds process: because the town retired principal on prior GO bond issues in the prior fiscal year, the town can, in the current fiscal year, issue new GO debt up to two‑thirds of the principal paid off the prior year without a voter referendum, subject to Local Government Commission (LGC) review and a public hearing.
Cole estimated the two‑thirds capacity for this fiscal cycle at about $1.9 million based on the town’s fiscal‑24 principal retirements, and he outlined three options for council consideration: (1) do nothing and let the two‑thirds opportunity lapse, (2) issue the two‑thirds in addition to the already planned voted sale (increasing total debt issued this spring), or (3) accept the two‑thirds but reduce the voted sale by the same amount so the net borrowing this spring remains unchanged. Staff recommended option 3 to preserve additional capacity for a future issuance and to give a later council better information before issuing more voted debt.
Cole summarized timing and requirements if council wishes to proceed: submit an LGC application, introduce a bond order and a findings resolution (Feb. 4 meeting), hold the required public hearing (Feb. 18), obtain LGC consideration (early March), adopt final issuance resolutions and sell bonds (March 25 sale date was discussed), and close in April. Cole and Beck emphasized that submitting the LGC application is not binding and that the town would still need council resolutions and the public hearing before any bonds are sold.
Council members asked clarifying questions about the mechanism and possible uses. Mayor Greg Gatson described staff’s recommendation in lay terms as “like the home equity line” and said he was “nodding [his] head in favor of accepting the staff recommendation.” Other council members voiced support for preserving flexibility without increasing borrowing this spring. No formal bond issuance decision was taken at the meeting; staff will proceed with the application and the Feb. 4/Feb. 18 proceedings if council confirms direction at those upcoming meetings.
No votes were taken to issue bonds at this meeting; staff recommended following the calendar and returning with final resolutions if council elects to proceed.
